SINGLETARY: The millennials come of age

WASHINGTON — It’s no secret that many members of the millennial generation are struggling financially. They may be the first cohort to end up worse off than their parents.

The sheer number of millennials — about 80 million — makes then a significant force in the U.S. economy. But many of them have trouble accurately answering basic personal finance questions, spend more than they make and are worried about their debt, according to a new survey by the Investor Education Foundation of the Financial Industry Regulatory Authority (FINRA).

In looking into the finances of millennials, Ameriprise Financial found in a multi-generational survey that an overwhelming majority of them feel stretched by their car payments, credit cards and other bills. Only 57 percent with access to a workplace retirement plan are contributing enough money to take full advantage of the employer match.

The Pew Research Center has released a report comparing previous generations and millennials concluding that “coming of age during the country’s deepest economic downturn since the Great Depression” has made it hard for them to establish themselves financially.

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Separate from the report, Paul Taylor, a Pew executive vice president, has written a book that takes a more in-depth look at the generational gaps. In “The Next America: Boomers, Millennials, and the Looming Generational Showdown,” Taylor says that baby boomers and millennials are the lead characters in a coming economic battle.

“Every family, on some level, is a barter between the generations — I care for you when you’re young so you’ll care for me when I’m old,” Taylor writes.

But many millennials won’t be able to afford that. The changing of the script is best captured by the two big generations, Taylor says.

He points out that baby boomers will be “crashing through the gates of old age in record numbers for the next two decades, not nearly as well fortified financially for the journey as they’d hoped; and the millennials, 20-somethings who have landed back in their childhood homes in record numbers because they haven’t been able to get launched in a hostile economy.”

Consider these findings from the Pew research:

• About half of millennials with student loans say this debt has made it more difficult to make ends meet.

• Unemployment remains high. Pew says 13 percent of the 18-to-24 age group were out of work in the first month of this year.

• The share of young adults living in their parents’ home reached a historical high in 2012, three years after the Great Recession ended.

• Most millennials say they would like to marry. But many, especially those with lower levels of income and education, don’t think they can, because they don’t have “a solid economic foundation.”

• When compared to the two immediate predecessor generations, they have less wealth and income than the Gen Xers and boomers had at the same stage of their lives.

And what conversation about the generations can be conducted without addressing Social Security? Absent any changes to the system, “virtually all millennials will get back less in benefits than they contribute in taxes,” Taylor writes. Four years ago, about the time the oldest baby boomers began to retire, annual revenues into the Social Security system began to fall below annual payments.

Could we see a showdown between the generations on cuts to Social Security?

“At its core, this is a problem of generational equity,” Taylor writes. “The young today are paying taxes to support a level of benefits for the old that they themselves have no prospect of receiving when they become old.”

The problem with Social Security funding is not lost on millennials. Fifty-one percent of them don’t think there will be any money for them in the Social Security system by the time they retire. Thirty-nine percent believe they’ll get reduced benefits, according to the Pew report. And yet, despite this pessimism, 61 percent of young adults oppose Social Security benefit cuts.

Even with their financial burdens, millennials are economically optimistic overall. Contrary to the evidence that they are struggling, 51 percent said they may not earn enough now but they expect to in the future, Pew found.

Taylor was a guest on Jon Stewart’s “The Daily Show” to talk about the generational showdown. In his typical funny and insightful way, Stewart said he didn’t think there would be much of a fight because millennials are younger, healthier and probably stronger.

To which Taylor responded with a LOL quip: “They’re still living with mom and dad, so it’s a little hard to mount a generational war from your childhood bedroom.”

Yet ultimately, the economic fates of all the generations are intertwined. We need each other.

Readers can write to Michelle Singletary c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal resonses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.